Antitrust Criminal Defense Blog

Supplier Executive Sentenced in Price-Fixing Probe

Shingo Okuda, an executive with G.S. Electech, admitted on Thursday to his role in an international conspiracy to rig bids and fix prices on auto parts.  Okuda pleaded guilty in Kentucky federal to one count of price-fixing and one count of bid rigging.  He will now serve 13 months in a United States prison. In addition to jail time, Okuda will also pay a $20,000 criminal fine and has agreed to assist the Department of Justice with its current auto-parts investigation. Okuda was originally indicted by a grand jury in September and charged with violating the Sherman Antitrust Act.

According to the indictment, Okuda and co-conspirators participated in meetings and conversations to discuss bids and price quotations from as early as January 2003 through February 2010.  They coordinated to suppress and eliminate competition in the automotive parts industry by agreeing to rig bids and fix prices on speed sensor wire assemblies sold to Toyota in the United States and across other regions.  These wires connect a sensor on each wheel to the anti-lock brake system and instruct it when to engage to avoid uncontrollable skidding.

G.S. Electech pleaded guilty to its involvement in the price-fixing conspiracy in 2012 and agreed to pay a $2.75 million criminal fine.  It is one of 27 companies that have pleaded guilty or agreed to plead guilty in this conspiracy.  According to the Department of Justice, the accused companies have agreed to pay a total of nearly $2.3 billion in fines.

Okuda becomes the 36th individual charged in the department’s ongoing investigation. Twenty-six have already pleaded guilty.

The case is U.S. v. Shingo Okuda, case number 2:13-cr-00051, in the U.S. District Court for the Eastern District of Kentucky.

Posted in Bid Rigging, Price fixing |

Three Lenders Agree to Antitrust Settlement

According to Attorney General Patrick Morrisey, the state of West Virginia will receive $950,000 through a settlement with three of the 22 institutions charged with allegedly rigging bids, fixing prices and manipulating the markets for municipal derivatives.  This officially brings the total number of banks the state has settled with in the multi-district litigation to seven.

“We are pleased our office could reach this settlement with the three financial institutions,” Morrisey said. “Our office worked diligently on this case, and it is good to see the work pay off.”

The deal, which was announced on July 28th, will close claims against GE Funding Capital Market Services, Trinity Plus Funding Co., and Trinity Funding Co. who were sued as part of the 2009 lawsuit filed by previous Attorney General Darrell McGraw.  These institutions, who denied allegations at the time the complaint was filed, also denied any wrongdoing in Monday’s settlement.

Morrisey’s office has already reached antitrust settlements with JPMorgan Chase, Morgan Stanley, Bank of American, and Royal Bank of Canada in the past 18 months.

Lawsuits against the remaining banks remain ongoing.

The majority of the settlement money, except for attorney fees and costs, will benefit state agencies that had invested in municipal derivatives, including the West Virginia Higher Education Policy Commission, the West Virginia Water Development Authority, West Virginia University’s Board of Governors, the West Virginia Economic Development Authority, the West Virginia Hospital Finance Authority, Shepherd University, the West Virginia School Building Authority, the West Virginia Department of Highways, West Virginia Housing Development Fund, and Fairmont State University’s Board of Governors.

The Attorney General’s Office was represented in the case by the Berthold Law Firm.

Posted in AntiTrust Law |

Export-Import Bank Employees Investigated for Big Rigging

Four officials with Export-Import Bank of the United States are being investigated by the U.S. House of Representatives’ oversight committee over allegations of bid-rigging. The committee has accused bank employees of accepting kickbacks, and in some cases, working to steer government contracts to favored companies.  Among the four individuals being questioned is Johnny Gutierrez, who was placed on leave after an investigation was launched into claims that he accepted money in exchange for vouching for a Florida-based company that sought government financing to export construction equipment to Latin America.

Darrell Issa, R-Calif., and Jim Jordan, R-Ohio, of the Oversight and Government Reform committee, demanded in a letter on Wednesday that Export-Import Chairman Fred Hochberg provide names and employment status of the alleged employees.  Hochberg has until July 23rd to provide the requested documents and other court related evidence.

Hochberg told the House Financial Services Committee last month that he was “outraged” by the recent revelations of corruption at the agency and announced that the company’s inspector general had launched a probe into the matter.

On Wednesday, Issa and Jordan stated their concerns with Hochberg’s testimony and noted that magnitude of the allegations may signal a broader scope of corruption at the bank.

The four employees are not the first to be investigated at Export-Import Bank. In 2009, Maureen Njideka Edu was indicted for taking a $100,000 bribe from a Nigerian businessman who was looking to do a deal with a Kentucky-based technology company.


Posted in Bid Rigging |

U.S. Steel Agrees to Settlement in Price Fixing Lawsuit

U.S. Steel Corporation has agreed to pay $58 million in order to settle a 2008 lawsuit that accused the company of conspiring with others in a steel price fixing scheme.  The Pittsburgh based steelmaker continues to deny “any and all wrongdoing” and says it only agreed to settle in order to avoid the cost and risk of further litigation and trial.  The settlement was filed today in the United States District Court for the Northern District of Illinois

The lawsuit alleges that U.S. Steel and other major steelmakers deliberately cut back on production between 2005 and 2007 to raise prices.  U.S. Steel is specifically accused of running its mills at 90 percent capacity at the beginning of 2005 before cutting back to 75 percent later that same year.

Luxembourg based ArcelorMittal SA recently agreed to pay a $90 million settlement in this case, the highest amount among those companies to have settled at this time. AK Steel Corporation, Gerdau Ameristeel Corporation, and Commercial Metals Corporation have also all previously settled for a collective total of $15.9 million. Nucor, Steel Dynamics, SSAB Swedish Steel Corporation were also named as defendants and have yet to settle.

The amounts of the settlements were determined by the size of the companies and how much steel they shipped.  U.S. Steel controlled 16 percent of the market during the mid-2000s, while AcerlorMittal controlled over 25 percent.

The case is In Re: Steel Antitrust Litigation, Standard Iron Works et al v. ArcelorMittal et al., case number 1:08-cv-5214, in the United States District Court for the Northern District of Illinois.

Posted in Price fixing |

American Express Antitrust Trial to Begin Today

American Express will face off today in a trial against the United States government and 17 states over claims that it hinders competition from credit card providers that charge lower processing fees.  This trial is expected to last throughout the summer and will address American Express rules that bar its millions of merchants from offering incentives for customers to use less expensive credit cards or cash when making purchases.  United States Judge Nicholas Garaufis is expected to preside over the non-jury trial.

The case stems from a civil antitrust suit filed by the Justice Department in 2010 which said AmEx’s rules for merchants inhibited competition and ultimately created higher fees for consumers.  The government isn’t seeking monetary damages in this case and only hopes to force AmEx to drop its merchant restrictions.  Testimonies are expected from AmEx Chief Executive Kenneth Chenault and roughly 30 merchants including Best Buy Co., Safeway Inc., and Jo-Ann Stores LLC.

Visa Inc. and MasterCard Inc. were also involved in the 2010 suit but chose to settle the case on the same day it was filed.  Under their settlement, the two companies agreed to allow merchants to offer discounts, rebates, and other inventive to get customers to use cards with lower merchant fees.

American Express has defended the restrictions they place on merchants by saying they aren’t large enough create an anticompetitive presence in the industry.  In 2013, there were 53.6 million AmEx cards in circulation compared to 254.1 million United States issued cards from Visa and 178.3 million cards from MasterCard.

The case is United States of America, et al v. American Express Co, U.S. District Court for the Eastern District of New York, No. 10-04496.

Posted in AntiTrust Law |

Three Auto Suppliers Plead Guilty in Price Fixing Probe

Three United States companies that provide foam for automobile seats pleaded guilty to price fixing last Friday and became the latest suppliers charged in a probe into the auto parts industry.  The three firms charged are Woodbridge Foam Fabricating Inc, Riverside Seat Co. and SW Foam LLC. These companies have agreed to pay a total of $6,148,800 and will cooperate with the department’s ongoing investigation.

The Justice Department reports that the firms pleaded guilty in United States District Court in Brooklyn and admitting to fixing prices from at least April 2008 through June 2009. According to the charge, the companies and their co-conspirators discussed polyurethane foam prices and agreed to coordinate the timing and amount of increases to customers.  The three manufacturers are charged with price fixing in violation of the Sherman Act which carries a maximum penalty of a $100 million criminal fine for corporations.

“Today’s charges demonstrate the Antitrust Division’s commitment to holding companies accountable for conspiracies that affect components used in products that consumers rely on every day,” said Bill Baer, Assistant Attorney General in charge of the Department of Justice’s Antitrust Division.  “The Antitrust Division will vigorously prosecute companies that engage in price-fixing schemes that subvert normal competitive processes and defraud American consumers and businesses.”

To date, 34 people have been charged in this investigation and twenty-four have pleaded guilty or agreed to plead guilty.  Additionally, 27 companies have pleaded guilty or agreed to plead guilty and have agreed to pay more than $2.3 billion in total fines.

The government estimates that over 25 million cars sold in the United States since 2003 have been affected by price fixing and the victims include major automakers from Detroit and Japan.

Posted in Price fixing |

Court Rejects Viacom’s Bid to Dismiss Cablevision Lawsuit

The antitrust lawsuit filed by Cablevision against Viacom in February of 2013 will move forward after a federal judge rejected Viacom’s efforts for dismissal on Friday.  If the court rules in favor of Cablevision, it would set a precedent restricting the ability of programmers to force multichannel video program distributors (MVPDs) to accept bundles of ancillary content in order to gain access premium channels.

Cablevision filed the suit against Viacom after they were forced to carry and pay for 14 low-rated or obscure “suite networks” that Cablevision says its customer do not want.  For example, Cablevision must carry channels such as Palladia, MTV Hits, and VH1 Classic, in order for them to gain access to must-have networks like BET, Comedy Central, MTV and Nickelodeon. The alternative would have been for Cablevision to pay a penalty of roughly $1 billion.

Cablevision believes that Viacom used a “per se” illegal channel tying arrangement which violates federal antitrust laws. The lawsuit also accuses Viacom of engaging in unlawful “block booking,” a practice that got Paramount Pictures in trouble during the Golden Age of Cinema.

In contrast, Viacom said that bundling was a valid and longstanding industry practice.  They also noted that Cablevision’s contract did not permit an “a la carte” approach to selecting channels.

Cablevision released a statement saying that it was “gratified” by the decision handed down by United States District Judge Laura Taylor Swain.   “We continue to believe that Viacom’s tying of its popular networks to carriage of its lesser-watched ancillary networks is illegal, anti-consumer and wrong,” Cablevision said. “We look forward to further pressing our case at the next stage of the proceeding

Posted in AntiTrust Law |

Former Housing Director Sentenced in Bid Rigging Case

Walter Guillory, the former public housing director in Lafayette and Opelousas, has been sentenced to two years and four months in federal prison for bid rigging and wire fraud.  United States District Judge Elizabeth Foote announced the sentence on Wednesday June 11th and ordered two concurrent 28 month terms to be served.  Guillory received a reduced prison sentence due to his cooperation in an ongoing probe into public housing.

Guillory served as the executive director of the Lafayette Housing Authority (LHA) from June 1998 through October 2010, and as the director of the Opelousas Housing Authority (OHA) from November 2005 to November 2010.  During this time period, he solicited donations from various vendors and contractors of both the LHA and the OHA for a local baseball team that he sponsored.  The vendors were expected to make these yearly donations in exchange for doing business with the housing authorities.  He solicited and received more than $100,000 in bribes during this scheme and used the majority of the funds to pay for personal expenses.

Guillory, 51, pleaded guilty to federal bribery and wire fraud charges on February 14, 2014.

The FBI and the United States Department of Housing and Urban Development conducted the investigation of these charges.  Assistant United States Attorney Kelly P. Uebinger led the prosecution of this case.

Posted in Bid Rigging |

Former Takata Executive Indicted for Price Fixing

Gikou Nakajima, the former director of consumer relations with Takata Corporation, has been indicted by a federal grand jury for allegedly helping to fix the prices of seatbelts that were sold to leading Japanese automakers.  Nakajima was charged with one count of conspiracy to fix prices in violation of the Sherman Act.  According to the Justice Department, he faces up to 10 years in prison and fines up to $1 million if convicted.  The fines, however, can be increased to twice the gain derived from the crime or twice the loss suffered by the victim.

The indictment alleges that Nakajima conspired with competitors to rig bids for the prices of seat belts being sold to Japanese auto manufacturers and their subsidiaries from September of 2005 through June of 2009.  The affected seat belts were sold to Toyota Motor Corp., Honda Motor Co., Nissan Motor Co., Mazda Motor Corp. and Fuji Heavy Industries Ltd.

“Today’s indictment demonstrates that the antitrust division continues to hold accountable executives who collude with their competitors,” stated Brent Snyder, deputy assistant attorney general for the antitrust division’s criminal enforcement program.

Takata Corporation pleaded guilty to price fixing in October and was fined $71.3 million for its involvement in conspiracy.  Four other Takata executives have also pleaded guilty and were sentenced with prison time and fines.

Posted in Price fixing |

Price Fixing Probe in Auto Parts Industry Continues

In a report updating the current status of a price-fixing and bid-rigging probe into the auto parts industry, the Associated Press has noted that the scope of charges only continues to expand.  Last Thursday an executive from a Japanese company became the newest chapter in the investigation after he was charged with fixing the prices of heater control panels sold to Toyota.  He also allegedly instructed his employees to destroy evidence in an attempt to conceal the scheme.

In the last four years, 34 individuals and 27 companies have pleaded guilty as part of the largest criminal antitrust investigation in the history of the Justice Department.  Collectively, the individuals and companies have agreed to pay more than $2.3 billion in fines.

The inflated prices have impacted the end prices of at least 25 million Chrysler, GM, Ford and Toyota cars.  An attorney in the DOJ’ antitrust division told the Associated press, “It’s a very, very safe assumption that U.S. consumers paid more, and sometimes significantly more, for their automobiles as a result of this conspiracy.”

The Justice Department continues to work with officials in Australia, Japan and other countries around the world to catch and prosecute the responsible parties.  Despite the charges filed and fines paid since 2010, the Associated Press reports that the DOJ investigation remains ongoing. To date, the investigation has resulted in 27 guilty pleas and over $2.3 billion in fines.

Posted in Price fixing |